The Digital Dividend Is Fun And Taxable

Michael Hedges May 14, 2013 - Follow on Twitter

Yet another government commission has taken a shot at monetizing that digital dividend. Tax revenue sources are more agreeable, in theory, when pinned to the fun stuff. But taxing wine is, well, cultural. There’s a quantum effect; the harder the digital dividend is chased the easier it gets away.

Joining the long line of French government inquiries into understanding 21st century media comes Pierre Lescure, former Canal+ CEO, mandated by President François Hollande last year to “revise the revisions” in laws supporting the all-important French “cultural exception.” The report – Culture-Acte 2 - was presented Monday morning (May 13) to Culture Minister Aurélie Filippetti and later to the general public via the Ministry of Culture’s website. (See here – in French) For those disinclined to save trees, the printed version clocks in at 486 pages weighing 2.3 kg, reported Liberation (May 14). Interviews with the conducted for the report revealed the public’s chief complaints as high prices and low choice. The 80 proposals are not binding on President Hollande.

Others have tried to find appropriate solutions to the culture and digital divide.. The task was given to retailer FNAC CEO Denis Olivennes in 2007 by now-former President Nicolas Sarkozy to deal bluntly with the scourge of downloading and the Hadopi law followed. The music and film industries rejoiced while the general public rebelled. Then came Patrick Zelnik, a record label owner and also mandated by M. Sarkozy, who proposed in 2010 a tax on search engines and ISPs to support arts and culture as well as punish Google. It went nowhere and M. Sarkozy beat a hasty retreat after election defeat in 2012.

The most taxing of the proposals is a sales tax between 1% and 3% on “connected devices,” meaning fun stuff like smartphones, game consoles, tablets and PCs, to support French arts and culture industries. In recent years that support has come from a tax on advertising, pay-TV subscriptions, movie tickets and recordable media (DVD) sales, roughly €750 million in 2012. But those revenue streams could be slipping away.  “If the present system is retained, revenue will drop drastically in three to five years,” said M. Lescure, quoted by Les Echos (May 13).

The most obvious is ditching the noxious final solution of the “three-strikes” provision in the obnoxious Hadopi law. No longer would illegal downloaders face suspension of their internet access and fines would be reduced from a top of €1,500 to a mere €60. The “spirit” of Hadopi would continue, said rue89.com (May 13), but enforcement would transfer to media regulator CSA (Conseil supérieur de l'audiovisuel), saving about €9 million a year.

The most reality-based provision would reduce the mandated delay between a film’s theatrical release to eventual availability on video-on-demand (VoD) services from 36 months to 18 months. “Thirty-six months is an eternity on the internet,” observed M. Lescure. “Telling the public to be patient pushes them into the arms of piracy.” French television channels would also be allowed to broadcast imported TV series quicker.

The Lescure Mission proposals do not, said the Ministry of Culture statement, support a “Google tax” favored by the newspaper and music industries as the legality “seems questionable.” The proposals are, however, intertwined with trade negotiations. Minister Filippetti and Foreign Trade Minister Nicole Bricq have asked that audiovisual services be removed from bilateral and multilateral trade agreements set for an international conference in June. “For France the cultural exception is clearly a red line,” said Minister Bricq, quoted by Liberation (May 14).

Industry experts and professionals in the affected sectors will be formally consulted on the Lescure Mission proposals in June. “The government will take full responsibility for following up this report,” said Minister Filippetti.

See also in ftm Knowledge

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